Unqualified Audit Chairmen Put FTSE 100 Corporate Reputations At Risk

March 3, 2009 - PRLog -- More than a third of FTSE 100 audit chairmen have no accountancy qualification, according to research conducted by Accountancy magazine, published by CCH, part of Wolters Kluwer UK.

As more companies collapse in the recession, it is likely that the blame will turn towards the auditor and the audit committee that appointed it and reviewed its work. This could be worrying for those FTSE 100 companies that do not have an accountant heading their audit committee, Accountancy suggests, particularly when it is becoming increasingly difficult to find appropriately qualified and experienced people who are willing to take on the responsibility and risks of sitting on an audit committee.

Many FTSE 100 audit committees tend to favour the Big Four accountancy firms as their company’s external auditor and chairmen of these committees are dominated by ex-finance directors, many of whom had previously worked for one of the large audit firms. Accountancy magazine’s survey investigated a possible ‘jobs for the boys’ link but instead found that very few of the audit committee chairmen in the FTSE 100 were trained by the firms that are now external auditors of their company.

“This may be coincidence, or perhaps in this increasingly fragile and paranoid world of business, non-executive directors cannot afford the slightest whiff of favouritism, partisanship or anything that could remotely be described as scandal,” says Accountancy’s editor, Sally Percy.

“It is too early to claim this is a trend, engineered to avoid accusations of nepotism in the light of the controversial, smoking-gun links between government, the banks and the financial regulator that are emerging from the banking collapse,” says Sally Percy. “But with some heavyweight names sitting on many FTSE 100 audit committees, it is difficult to see that any auditor will be able to pull the wool over the eyes of any of these experienced people.”

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Wolters Kluwer UK, incorporating CCH and Croner, is a provider of business information and consultancy services to help make businesses more effective and profitable; from software and online information, to books, journals, training and consultancy.

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